TAX UPDATE CHINA

Ministry of Finance and State Taxation Administration

 

Announcement No. 12 of 2023

 

The preferential Corporate Income Tax (CIT) rate of 5% for Small and Medium Low-Profit Enterprises, originally set to expire at the end of 2024, is extended until December 31, 2027.

 

Note

 

  • Criteria for Small and Medium Low-Profit Enterprises:
  • Taxable income not exceeding 3 million RMB.
  • Number of employees not exceeding 300.
  • Total assets not exceeding 50 million RMB.
  • Reduction of six taxes and two fees for Small-Scale Taxpayers and Small and Medium Enterprises.

 

Taxpayers with small-scale VAT flat-rate regimes, small and medium enterprises, and individual businesses will benefit from a 50% reduction in resource tax, urban maintenance and construction tax, property tax, urban land use tax, stamp duty, rural land occupation tax, education surcharge, and local education surcharge.

 

The previous preferential policy, originally set to expire at the end of 2024, is extended until December 31, 2027.

 

 

Announcement No. 19 of 2023

 

Extended Preferential VAT Policy for Small-Scale Taxpayers, originally set to expire at the end of 2023, is extended until December 31, 2027. Details as follows:

 

  • Small-scale VAT taxpayers with monthly sales not exceeding 100,000 yuan will be exempt from VAT.
  • Small-scale VAT taxpayers with monthly sales exceeding 100,000 yuan and subject to the 3% VAT rate will see the VAT rate reduced to 1%.

 

 

Announcement No. 29 of 2023

 

Extended Preferential Individual Income Tax (IIT) Policy for Foreign Nationals' Salaries, originally set to expire at the end of 2023, is extended until December 31, 2027. Details are as follows:

 

  • Foreign individuals residing in China for tax purposes can choose to benefit from one of the following policies:
  • Special additional deductions for individual IIT, or
  • Tax exemption policies such as housing subsidies, language training expenses, and children's education expenses, etc.

 

Once chosen, foreign individuals are not allowed to change it within one fiscal year.

 

 

Announcement No. 30 of 2023

 

The lump-sum annual bonus will continue to benefit from the preferential IIT policy until December 31, 2027. A tax resident can choose to include the lump-sum annual bonus in the annual salary income or calculate IIT separately for the lump-sum bonus."

 

 

 

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